KARACHI: The currency market remained volatile on Thursday as the dollar fell sharply against the rupee and kept moving within the new range given by Finance Minister Ishaq Dar.

The dollar was traded up to Rs108.20 in the morning, but closed at Rs105.50-106, said bankers and currency dealers.

Although Mr Dar was highly critical of the situation a day ago, he now seemed to have accepted two per cent devaluation instead of 3.1pc.

“Banks traded the dollar at various prices, but (the rate) did not exceed Rs107 after the morning session,” said a senior banker while noting the finance minister’s statement that the value of dollar should not exceed Rs107.

Currency dealers said the interbank market started at Rs108.30, but soon the dollar started falling against the rupee and dropped to Rs105.50 around midday. It rose again as the dealers traded it up to Rs107.

They said the rift between the SBP and the Ministry of Finance produced a mixed reaction in both interbank and open markets. But banks adopted a cautious approach and preferred to remain within the new range of Rs105-107.

The banker said dollar trading on Wednesday was affected by huge payments relating to the acquisition of NIB Bank by MCB Bank.

“The market panicked after huge buying was made for the payment against NIB Bank,” said Atif Ahmed, a currency dealer. He added that the payment amount was about $150 million.

Currency dealers said a large payment of $100m-150m was mishandled as a single bank was asked to carry it out. It triggered speculations that devaluation had been allowed.

Currency dealers in the open market said they followed the interbank market and did not let the rate cross Rs107. The open market witnessed a dull day on Thursday while no public buying was noted on Wednesday.

“There was no panic in the public as it did not buy dollars while selling dropped by 95pc. We deposited about $5m in interbank on Wednesday as no buyer was available,” said Malik Bostan, president of the Forex Association of Pakistan. No data was available for Thursday.

He said public buying was nominal across the country on Thursday, which kept the market calm for the whole day.

Published in Dawn, July 7th, 2017